Converting lignocellulosics into biofuels remains a promising route for biofuel production. To facilitate strain development for specificity and productivity of cellulosic biofuel production, a user friendly Escherichia coli host was engineered to produce isobutanol, a drop-in biofuel candidate, from cellobiose. A beta-glucosidase was expressed extracellularly by either excretion into the media, or anchoring to the cell membrane. The excretion system allowed for E. coli to grow with cellobiose as a sole carbon source at rates comparable to those with glucose. The system was then combined with isobutanol production genes in three different configurations to determine whether gene arrangement affected isobutanol production. The most productive strain converted cellobiose to isobutanol in titers of 7.64 +/- 0.19 g/L with a productivity of 0.16 g/L/h. These results demonstrate that efficient cellobiose degradation and isobutanol production can be achieved by a single organism, and provide insight for optimization of strains for future use in a consolidated bioprocessing system for renewable production of isobutanol.